Compensation formula for Medicare doctors in 14 counties updated to reflect current data

Apr012014

The bill, approved by the Senate on Monday, includes a key provision for California doctors that will permanently adjust a reimbursement calculation that has resulted in underpayments for Medicare doctors in more than a dozen California counties.

The provision fixes what is known as the Medicare Geographic Practice Cost Index, or GPCI, a formula that uses a doctor’s location to determine compensation for Medicare services. The formula has not been updated for years to account for demographic changes, meaning some urban counties like San Diego and Riverside are still classified as rural, which reduces compensation for Medicare payments to doctors.

The problem was solved in the Senate-passed bill by changing the GPCI formula to match the system used to classify payments to hospitals, which uses updated data.

“For years, many doctors in California were underpaid for Medicare services because a decades-old formula had not been updated. This bill will finally address that oversight,” said Senator Feinstein. “I have been fighting for years to correct the outdated GPCI formula that led physicians in counties like San Diego to receive reimbursements at a lower rural rate. This bill means that doctors serving Medicare patients throughout the state will receive fair compensation.”

In some cases, the outdated formula used by Medicare to determine reimbursements has incorrectly classified locations of practices as rural even though their operating costs are similar to practices in urban areas. These practices end up being underpaid by Medicare. Currently, California accounts for a larger number of payment inconsistencies than any other state.

Doctors in the following counties will be affected: El Dorado, Marin, Monterey, Placer, Riverside, Sacramento, San Benito, San Bernardino, Santa Cruz, San Diego, San Luis Obispo, Santa Barbara, Sonoma and Yolo.